

14.	Stockholder's Equity

Holders of common stock are entitled to one vote for each share on all matters voted upon by the stockholders, including the election of directors and do not have cumulative voting rights. Subject to the rights of holders of any then outstanding shares of preferred stock, common stockholders are entitled to receive ratably any dividends that may be declared by the Board of Directors out of funds legally available for that purpose. Holders of common stock are entitled to share ratably in net assets upon any dissolution or liquidation after payment of provision for all liabilities and any preferential liquidation rights of our preferred stock then outstanding. Common stock shares are not subject to any redemption provisions and are not convertible into any other shares of capital stock. The rights, preferences and privileges of holders of common stock are subject to those of the holders of any shares of preferred stock that may be issued in the future.

The Board of Directors may authorize the issuance of one or more classes or series of preferred stock without stockholder approval and may establish the voting powers, designations, preferences and rights and restrictions of such shares. No preferred shares have been issued.

Treasury and Forfeited Shares

On November 2, 2018, the Board of Directors approved a plan that authorized stock repurchases of up to 2.0 million shares of the Company’s common stock. Under the plan, the Company may repurchase its common stock in the open market or through privately negotiated transactions at such times and at such prices as determined to be in the Company’s best interest. The Company accounts for the repurchase of treasury shares under the cost method. This repurchase program expires on June 30, 2020 and may be modified, extended or terminated by the Board at any time. The Company repurchased 466,519 shares of its common stock during fiscal year 2018. There was no treasury stock held by the Company during 2017.

Upon the vesting of unvested common stock (or restricted stock) the Company may allow employees to withhold shares, based on the employee’s election, in order to satisfy any tax withholdings required by law. The shares held by the Company are considered constructively received and are retired shortly after withholding. The Company then remits the withholding taxes required by the taxing agencies. During 2018 and 2017, there were 28,291 and 65,952 shares withheld for tax purposes and retired.

Stock-based Compensation and Grants

The Company had a stock-based incentive plan, 2001 Stock Incentive Plan, that was administered by the company with oversight by the Compensation and Talent Development Committee of the Board of Directors (the “2001 Stock Plan”). The 2001 Stock Plan was replaced with the 2018 Stock Plan (the "2018 Stock Plan") described below. The 2001 Stock Plan provided for the issuance of stock awards for up to 1,900,000 shares of the Company’s common stock.

In May 2018, the Compensation and Talent Development Committee of the Board of Directors approved the 2018 Stock Plan. This plan replaced the former 2001 Stock Plan. The 2018 Stock Plan provides for the issuance of stock awards for up to 1,800,000 shares of the Company’s common stock. The Compensation and Talent Development Committee may reward employees and non-employees with various types of awards including but not limited to warrants, stock options, common stock, and unvested common stock (or restricted stock) vesting on service, performance or market criteria. At December 31, 2018, there were 957,392 shares of common stock available under the Stock Plan. All shares under the plan are available for issuance pursuant to future stock-based compensation awards.

Common Stock Awards

The following table summarizes the Company’s service and performance based share compensation awards:



	Number of Shares		Weighted Average Fair Value Per Share
Nonvested at December 31, 2015	913,823		$	4.83
Granted	79,240		4.36
Vested	(351,855	)	4.46
Forfeited	—		—
Nonvested at December 31, 2016	641,208		4.97
Granted	217,341		10.69
Vested	(612,463	)	5.09
Forfeited	(5,357	)	6.27
Nonvested at December 31, 2017	240,729		9.82
Granted	1,196,575		12.58
Vested	(150,280	)	10.54
Forfeited	(19,495	)	14.05
Nonvested at December 31, 2018	1,267,529		$	12.40

In 2018, 2017 and 2016, certain key employees were granted an aggregate total of 1,147,285, 180,542 and 20,000 shares of unvested common stock, respectively, with a weighted average fair value per share of $12.62, $10.92 and $4.78 per share, respectively, expected to be recognized ratably over a two- to four-year restriction period. The Stock Plan provides for grants of restricted stock and other stock-based awards. Pursuant to non-employee director compensation arrangements, non-employee directors of the Company were awarded unvested stock with one-year vesting as follows:



	Years Ended December 31,
	2018		2017		2016
Shares awarded to each non-employee director*	7,404		5,257		11,848
Total shares awarded	44,424		36,799		59,240
Average grant-date market price per share	$	11.48	$	9.60	$	4.22
Total compensation cost attributable to shares awarded	$	509,988	$	353,000	$	250,000
Compensation cost recognized related to current and prior year awards	$	518,164	$	283,307	$	249,995
* Additional non-employee director was issued 4,866 shares at $13.10 which were prorated due to date of appointment, with a total compensation cost of $63,745.

On January 1, 2015, the Company implemented a long-term incentive program for certain long-term employees, which contains time based and performance based awards, grants of the Company’s stock if certain long-term achievements are met. During the year ended December 31, 2017, 47,947 shares were vested, including 15,982 additional shares for achieved performance and none of these shares were forfeited. During the year ended December 31, 2016, 29,781 of these shares were accelerated and amortization expense was adjusted.

At December 31, 2018, total unrecognized compensation cost related to unvested common stock was $13.6 million. This cost is expected to be recognized over a weighted average period of 3.77 years. Compensation expense for service-based and performance-based grants was $3.1 million, $2.8 million and $1.8 million for 2018, 2017 and 2016, respectively.

Stock Offerings

On April 3, 2017, in connection with the Tealstone Acquisition, the Company issued 1,882,058 shares of the Company’s stock as consideration paid to the sellers. The value of the shares issued was $17.1 million based on the average fair value of the shares on the date of acquisition.

On May 9, 2016, the Company completed an underwritten public offering of 5,175,000 shares of the Company’s common stock, which included the full exercise of the sole underwriter’s over-allotment option, at a price to the public of $4.00 per share ($3.77 per share net of underwriting discounts). The net proceeds from the offering of $19.1 million, after deducting underwriting discounts and other offering expenses, were used for working capital, repayment of our indebtedness under the revolving loan portion of our Equipment-based Facility and for general corporate purposes.

Warrants

On April 3, 2017, the Company issued warrants (the “Warrants”) to the lenders under the Oaktree Facility (the “Holders”) pursuant to which such holders have the right to purchase, for a period of 5 years from the date of issuance, up to an aggregate of 1,000,000 shares of the Company’s common stock (the “Warrant Shares”) at an initial exercise price of $10.25 per share, subject to adjustment for stock splits, combinations and similar recapitalization events and weighted-average anti-dilution upon the issuance by the Company of shares of common stock or rights, options or convertible securities exercisable for common stock in the future at a price below the exercise price of the Warrants.

The Company valued these Warrants using the Black-Scholes model, which is a type 3 fair value measurement. The key assumptions used in the Black-Scholes Model with respect to these valuations are summarized in the following table:



	At April 3, 2017
Current stock price	$	8.88
Exercise option price	$	10.25
Expected term of warrants (in years)	5
Expected volatility rate	48.29		%
Risk-free rate	1.88		%
Expected dividend yield	—		%

Based on these inputs, the total fair value of the warrants was $3.5 million, which was recorded as a Loan discount and netted against our new Loan and included in “additional paid in capital” on our balance sheet.